Far from crash, talk on AI ‘just getting started’ in India: Netweb CMD

In an interview, Sanjay Lodha, chairman and managing director of Netweb, said demand for AI “is far from facing a crash—in fact, in India, the conversations are just getting started."

“We are seeing a lot of clients talk about AI spending, and it is only in the past few months that India has begun seriously spending on AI infrastructure and services," Lodha told Mint. "There is good reason for me to believe that we can retain our 35-40% compounded annual growth rate (CAGR) over the next three to five years, as government initiatives and demand for sovereign AI grows."

Netweb Technologies, incorporated in 1999, rose to prominence two years ago upon its public listing. The company does not own data centres, but provides the infrastructure that run the AI factories of the modern era. These include custom-built IT servers tuned for AI usage.

Over the past two years, driven by the hype around AI, Netweb has returned steady returns to investors. As of closing on Monday, Netweb’s share price is up 55% over the past one year, and 3.8 times since listing in July 2023.

On Saturday, the company announced its December quarter earnings. Operating revenue jumped to ₹804.93 crore, a 165% sequential rise off the back of the company billing ₹450.39 crore under the ministry of electronics and information technology (Meity)’s ₹10,372-crore India AI Mission. On 3 September 2025, the company had notified getting a ₹1,734-crore order under the scheme to provide infrastructure to build sovereign large language models.

“We have segregated our revenue as core and strategic, because the AI Mission’s earnings are of a different kind. They are obviously of smaller margins because of the nature of government contracts, but are strategically very important since they help us serve public infrastructure demand," Lodha said. "We had previously signalled that we expected the first revenue tranche to be billed by the end of this fiscal, and have successfully done so in the December quarter. Future quarters will see more such billing on a case-by-case basis."

While Netweb has reported a steady rise in revenue since its listing, and is on track to surpass ₹1,500 crore in annual revenue for the first time this fiscal, the company’s margin has marginally declined.

In its first quarterly earnings since listing, Netweb had reported ₹148 crore in quarterly revenue and ₹15.14 crore in net profit—at a margin of 10.2%. As of December 2025, Netweb’s margin was 9%, down 1.3 percentage points sequentially.

Lodha attributed the margin decline this quarter to the large contribution of the low-margin government contract but maintained that rising cost of memory chips and starved demand of Nvidia’s pricey graphic processing units (GPUs) have not affected the company as yet.

“We have very strong long-term relationships with our component suppliers like Samsung and SK Hynix, and we play a key strategic role for them because of our position in the India market. We’ve managed to maintain a steady margin of 9%, which is proof that the global price rise of electronic components has not affected us," he said.

For now, investors seem bullish. On 15 December, a note to investors by analysts at brokerage firm ICICI Securities said the company is benefitting from being “India’s only full-stack hardware provider".

“Netweb has partnerships with Nvidia, AMD and Intel. Netweb is Nvidia’s only OEM (original equipment manufacturer) partner in India. Being Nvidia’s OEM partner, Netweb gets early access to its latest chips and architectures. Its strategic collaborations with technology partners—Intel, AMD, and Nvidia—allow continuous updates. This enhances Netweb’s product and service offerings, as it gets early product pipeline access of latest chips 12-24 months ahead; accordingly, designs servers and AI systems," ICICI Securities' note said.

The analysts also flagged risks, including its reliance on mega deals, negative cash flow and the non-recurrent nature of Netweb’s business.

“There is an increasing narrative that AI-led capex is not justified. As per an IBM 2023 report, the return on investments on AI projects ranges from 5.9% to 10% only. Simply AI-fying with LLMs and data centres without context and nuance may not help in generating the desired returns from the projects. Strong data quality (required to train LLMs/ SLMs) and AI strategy are key going forward," the note added.

Citing rising local usage, Lodha said that some of the company’s clients include homegrown enterprise technology platform maker Zoho Corp., India’s second-largest tech outsources Infosys’ AI platform Topaz and Hiranandani group’s data centre firm Yotta among private enterprises.

In public services, the company provides cloud platforms, GPUs and more to government bodies and organizations such as National Payments Corp. of India (NPCI) and Indian Space Research Organisation (Isro), among others.